Uno's main action as prime minister was to institute the country's first consumption tax, which immediately caused an uproar among many voters and led to the Japan Socialist Party's victory in the Tokyo metropolitan legislative election of 1989. Uno's government was also hurt by repercussive effects from the Recruit Scandal of 1988. Uno assumed office on 3 June 1989.

Uno eventually had to resign after less than three months amid a sex scandal revealed by a geisha.[citation needed] The controversy surrounding Uno's extramarital affair was more focused on irresponsibility to support the Geisha rather than immorality; Uno supposedly did not properly provide and support his mistress, at the least not with an appropriate amount, which led her to complain publicly and was branded as a stingy man. The story was not widely publicized in Japan until a Washington Post reporter picked up the story from the Mainichi Shimbun, bringing international attention to Uno.

Following Uno's resignation, most LDP lawmakers refused to associate with him,[citation needed] and he quickly lost control over his faction within the party.